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In retailing’s latest bust, billionaire Leon Black has pulled the bankruptcy plug on his two-year flop with Linens ‘n Things.

Black’s Apollo Management, which two years ago spent $1.3 billion of investors’ cash to take the home-furnishings chain private, put the company in bankruptcy protection yesterday with plans to fire 2,500 employees and shutter 120 of its 589 stores.

The setback didn’t slow down Black, who’s earning more than $330 million this year; he’s moving forward with a plan to list shares of his Apollo investment fund on the New York Stock Exchange.

Linens ‘n Things will continue operating using $700 million it borrowed from GE Capital as it attempts to cut costs, renegotiate leases and settle debts of more than $1.42 billion.

Apollo expects to resurrect the company by year’s end, having worked out a plan earlier with some bondholders and other creditors for how they’ll get paid.

Getting much of the blame for the chain’s failure was CEO Robert DiNicola, a former top executive from GNC and Zale Corp.

DiNicola is stepping aside to become executive chairman during the bankruptcy, with interim CEO Michael Gries taking charge of the restructuring, getting $200,000 a month and ultimately a $3 million fee.

Among the largest unsecured creditors of Linens ‘n Things are Yankee Candle Co., which is owed $4.6 million, and Aeolus Down, owed $4.3 million.